Copyright Termination Is Comin’ To Town Law360, New York

After sorting through the tangled 80-year history behind the song “Santa Claus is Comin’ to Town,” the Second Circuit recently held that rights to the Christmas classic will revert back to the songwriter’s heirs on Dec. 15, 2016. Rights to the composition, written by J. Fred Coots and Haven Gillespie, are currently held by EMI Feist Catalog Inc. According to the Second Circuit, EMI’s rights are derived from a post-Jan. 1, 1978, author-made grant that replaced and superseded a prior grant, and that is now eligible for termination.

The Second Circuit’s decision provides insight into the judicial review of termination rights, and sets out certain principles concerning the statutory calculation of termination dates. This article outlines the court’s decision in order to provide practitioners with guideposts that may be useful in determining if, and when, to terminate a grant of copyright.

Background: The Original Grant

Coots and Gillespie first transferred their rights in the song to EMI’s predecessor in 1934. Under the then-effective 1909 Copyright Act, EMI’s copyright in the song would subsist for an initial 28-year period, at which point Coots and Gillepsie would have the right to renew their copyright for an additional 28-year term. In 1951, Coots granted his renewal rights in the song to EMI. EMI renewed its copyright in the song in September of 1961, and expected to enjoy those rights until the copyright’s expiration, fifty-six years from the date it was first registered, on Sept. 27, 1990.

Prior to the song’s anticipated copyright expiration, Congress enacted the 1976 Copyright Act. Under the act, the song’s renewal term was extended by nineteen years; rather than expire in 1990, the song’s copyright would now subsist until 2009. The act additionally provided an opportunity to authors to benefit from this extended term. Under Section 304(c) of the act, an author (or certain statutory heirs) may terminate a grant of copyright executed prior to Jan. 1, 1978 (the effective date of the 1976 act). (Section 203 similarly provides authors (or their statutory heirs) the right to terminate grants executed on or after Jan. 1, 1978.)

 

Termination of the Grant

As a pre-1978 grant, the 1951 agreement was eligible for termination pursuant to Section 304(c). Coots took advantage of this statutory provision, serving a notice of termination on EMI in 1981. Coots assigned all of his rights to the song through the end of the extended renewal period (i.e., Dec. 31, 2009), to EMI, who agreed to pay Coots a $100,000 bonus and royalties for the extended term. This 1981 agreement was predicated on, and explicitly stated, that the 1981 termination notice was in full compliance with the 1976 Copyright Act, including § 304(c)(6)(D), which requires that the notice be recorded with the copyright office. Although Coots sent the 1981 termination notice to the copyright office for recordation, it was never officially recorded.

Although a post-Jan. 1, 1978, grant, the 1981 agreement was not, when it was signed, terminable under Section 203. Under Section 203, the 1981 agreement could not be terminated until 2016, well after the song’s renewal term ended in 2009. However, in 1998, Congress enacted the Sonny Bono Copyright Term Extension Act. For copyrights still in their renewal term, the act extended the renewal term by another 20 years — in this case, until 2029. While Coots had passed away in 1985, his heirs now had a potential opportunity to terminate the 1981 agreement. In 2007, Coots’ heirs served a notice of termination on EMI pursuant to Section 203, which allows for termination of post-Jan. 1, 1978, author-made grants “at any time during a period of five years beginning at the end of 35 years from the date of execution of the grant.” Coots’ heirs accordingly selected a termination date of Dec. 15, 2016.

Not surprisingly, Coots’ and his heirs’ multiple attempts to terminate multiple agreements coupled with the ever-changing landscape of copyright law led to confusion and disagreement regarding ownership. EMI maintained that Coots had not properly terminated the 1951 agreement by failing to record the 1981 termination notice, as required by the act’s termination provisions. Therefore, according to EMI, the 1951 agreement continued in place as the source of EMI’s rights in the song. The Southern District of New York agreed, finding that EMI owned its rights in the song under the 1951 agreement — a pre-1978 grant ineligible for termination under Section 203. Coots’ heirs appealed to the Second Circuit.

 

On Appeal: Second Circuit Determines Copyright Termination Valid

The Second Circuit was faced with two main questions: first, whether EMI owned its rights to the song under the 1951 agreement or the 1981 agreement. If the 1951 agreement governed, as EMI argued, there would be no termination rights available to Coots’ heirs. Reversing the district court’s decision, the Second Circuit determined that the parties to the 1981 agreement clearly intended to fully replace the 1951 agreement with the 1981 agreement. Because the court reached its decision by applying principles of contract law, whether or not Coots had, in 1981, correctly satisfied the act’s termination procedural requirements became “irrelevant.”

 

Calculating the Date of Termination

Concluding that the 1981 agreement is the source of EMI’s rights, the court next addressed the agreement’s proper termination date. Under Section 203, a grant may be terminated 35 years from when the grant was executed or, if the grant provided for the right of publication, the earlier of 35 years from the date of publication, or 40 years from the date of execution. EMI argued that publication of the song under the 1981 agreement could not have occurred until the 1951 agreement expired in 1990. Therefore, in EMI’s view, the earliest termination date provided by Section 203 would be 40 years from the date the 1981 agreement was signed — Dec. 15, 2021.

Analyzing Section 203’s reference to “the date of publication,” the Second Circuit determined, in a holding of first impression, that publication is a one-time event. The original 1934 agreement provided that the song would be published within one year; as a result, the court explained, it was the 1934 agreement, and not the 1981 agreement, that granted the right to publish the song. Accordingly, the 1981 agreement did not provide for the right of publication, and could be terminated 35 years from execution of the agreement — i.e., 2016. This leaves Coots’ heirs just one holiday season away from holding the rights to one of the most lucrative Christmas songs.

 

Conclusion

This case illustrates the complexity of the rules of copyright termination. In considering whether a copyright grant is terminable, both authors (and their heirs), along with entities and organizations to whom copyright rights have been granted, should examine all applicable agreements. It is important to consider all relevant dates, including the date an agreement was executed, and the first date of publication, in conjunction with the various copyright laws that may have come into effect over the life of the copyrighted work, particularly where the work is as old as this one.

Copyright termination becomes more complex when previously granted rights are regranted. To the extent a new, post-Jan. 1, 1978, author-made agreement has supplanted a previous, pre-1978 grant, Section 203 may be available to terminate the operative post-Jan. 1, 1978, agreement. Relatedly, parties renegotiating a grant of rights should be aware that the new agreement may replace the previous one, thereby restarting the clock for termination.

Additionally, this case clarifies the meaning of “publication” for purposes of copyright termination within the Second Circuit. As used in Section 203, “publication” should be considered a one-time event corresponding to the first instance of a work’s publication. Accordingly, when calculating the effective termination date of a post-publication grant, the alternate termination date calculation based on publication should be disregarded.

Brittany Kaplan and Marissa Lewis are associates in Cowan DeBaets’ New York office.

 

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